GYEONGJU, South Korea (AP) -- Japan warned Friday that the global economy will lose if countries compete to devalue their currencies, as top finance officials from the world's leading economies gathered for two days of talks they hope will defuse growing tensions over exchange rates.
Noda's comments underscore predictions that currency issues will take center stage at the meeting of finance ministers and central bank governors from the Group of 20 rich and emerging nations, which takes place ahead of a G20 leaders summit in Seoul next month.
The gathering in the South Korean city of Gyeongju comes just two weeks after the finance mandarins failed at a meeting in Washington to iron out differences that have led to fears of a currency war that could trigger another economic downturn.
In such a scenario, countries devalue their currencies to gain a competitive advantage in a less-than-robust world economy that has yet to fully recover from the global financial meltdown two years ago. Trade barriers are erected in response, hitting international commerce and sending the economic recovery into reverse.
A South Korean government official said the fact finance officials are discussing the currency issue is itself a "good achievement."
The official, who spoke on condition of anonymity as discussions on the issue were ongoing, said he expects "some progress" at the meeting with language aimed at avoiding a "currency war."
